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Hello all – I would like to open this question back up for discussion as it seems we weren’t as clear how to treat Trusts in regard to rescission back in 2015.
From the CMG M2M discussion earlier this month, it was agreed that since Trusts are natural persons under Reg Z, then they can have primary dwellings, and thus can also have rescission rights.
Specific questions we have are:
1. How is it determined that a Trust has a primary dwelling? Is it based off of whether the Trustee lives at that home? Or whether the person from the name of the Trust lives in that home?
Example 1: Jane Doe Trust owns the home. Jane Doe is the Trustee. Jane Doe lives in the home as her primary residence. This is the Trust’s primary dwelling. The Trust would get rescission.
Example 2: (harder concept) Jane Doe Trust owns the home. Sue Doe is the Trustee. Jane Doe lives in the home as her primary residence. Sue Doe does NOT live in the home. Is this the Trust’s primary dwelling?2. If a Trust does get rescission, is this just for the Trust (provided to the Trustee(s)) [note: our ROR forms have signature lines, so this would show “Jane Doe, Trustee for the xx Trust in the sig line]? Or would any individuals also living primarily in that home also get the rescission individually? (ex: the Trust/Trustee would get the ROR form, and also Jane as an individual would get/sign the ROR form).
Thank you all!
Our transaction meets the definition of ‘purchase’ from 1026.37.
What I have found in research is that the CFPB’s webinar hosted by Outlook Live in August 2014 addresses how to disclose the 2nd lien loan to purchase (these are on the CFPB’s website as TRID resources). The CFPB allows these 2nd lien lenders to utilize the “alternate” forms as long as the 1st lien lender discloses all of the seller’s amounts on their CloD.
The trouble we run into is that our program (LaserPro) does not allow us to switch to the alternate forms when the TRID Purpose is “purchase”. LaserPro’s legal counsel reviewed this issue for me and they agree, and have submitted an enhancement request to their technicians, hopefully allowing this for a future release.In the meantime, one of our Bankers found a workaround, which is to select the option to have the CloD prepared separately for borrower and seller, except that we will only provide the borrower CloD. The 1st lien lender will provide the CloD with seller info & we will put a copy of that for our file. This way, our CloD still has page 1 with purpose of “purchase”, seller information, and purchase price…while removing any amounts in seller columns from pages 2 and 3.
If you have additional thoughts on this please let me know.
I agree reporting as a home purchase loan as well (HMDA defines dwelling as a residential structure WHETHER OR NOT attached to real property), not owner-occupied (since it wont be their primary dwelling, but will be used as a secondary dwelling).
Your description doesn’t appear to fall into the “RV” category since the tiny house is immobile. While not a REGULATORY definition of a tiny house, I did find this site which begins to tell you when a tiny house is considered a dwelling versus an RV (per THEIR definitions of themselves), at: TinyHouseCommunity.com/FAQ.htm. It says: “legally, a tiny house on wheels is considered an RV, and a tiny house on a foundation is considered an accessory dwelling unit (ADU).” It might help to have that page printed for your file though.I think you will need to gather all of the deminsions and attachments and set-up of the tiny house before even beginning to analyse if you would code it as a 1-4 family dwelling or as a manufactured home. Reg C points us to HUD’s definition and it outlines very specific requirements as shown below…
24 CFR 3280.2
https://www.gpo.gov/fdsys/pkg/CFR-2012-title24-vol5/xml/CFR-2012-title24-vol5-sec3280-2.xml
“a structure, transportable in one or more section which, in the traveling mode, is 8 body feet or more in width or 40 body feet or more in length, or, when erected on site, is 320 or more square feet, and which is built on a permanent chassis and designed to be used as a dwelling with or without a permanent foundation when connected to the required utilities, and includes the plumbing, heating, air-conditioning, and electrical systems contained therein.”From clarification that we received via phone call from the CFPB last fall, you should only disclose items in the Prepaids section if you (the lender) require them to be paid at or before closing.
We do require the customer to maintain insurance and pay their property taxes, but we do not require those amounts to be paid AT closing…UNLESS we are escrowing (we only escrow if 1st lien HPML). Therefore, we do not need to list any amounts in the Prepaids section of the LE nor the CloD. The CFPB said we are good because this is our “consistent” policy of not collecting those items at closing unless the loan is escrowed, so they are not costs associated with our loan.
We will only list items in the prepaids section if we are escrowing them.In your example above, if we were not escrowing those items then we would not disclose them in the Prepaids section (pg 2, “Other Costs”, section “F. Prepaids”). We would, however, always include the estimate for those items on page 1 (“Projected Payments” box in the row “Estimated Taxes, Insurance, & Assessments”).
